The next step is to keep track of your income and your expenses for every month. Write down what you and others in your family earn, and then your monthly expenses.

Include a category for saving and investing. What are you paying yourself every month? Many people get into the habit of saving and investing by following this advice: Always pay yourself or your family first. Many people find it easier to pay themselves first if they allow their bank to automatically remove money from their paycheck and deposit it into a savings or investment account. That way they are never tempted to spend the money before they pay themselves first.

Finding Money to Save or Invest

If you are spending all your income, and never have money to save or invest, you’ll need to look for ways to cut back on your expenses. When you watch where you spend your money, you will be surprised how little everyday expenses that you can do without add up over a year.

How much does a cup of coffee cost you?

Would you believe $465.84?

If you buy a cup of coffee every day at $1.00, that adds up to $365.00 a year. If you saved that $365.00 for just one year, and put it into a savings account or investment that earns 5% a year, it would grow to $465.84 by the end of 5 years, and by the end of 30 years, to $1,577.50.

That’s the power of "compounding." With compound interest, you earn interest on the money you save and on the interest that money earns. Over time, even a small amount saved can add up to big money.

If you are willing to watch what you spend and look for little ways to save on a regular schedule, you can make money grow. You just did it with one cup of coffee.

If a small cup of coffee can make such a huge difference, start looking at how you could make your money grow if you decided to spend less on other things and save those extra dollars.

If you buy on impulse, make a rule that you’ll always wait 24 hours to buy anything. You may lose your desire to buy it after a day. And try saving your spare change at the end of each day. You’ll be surprised how quickly those nickels and dimes add up!

Now, once you have set aside some money to save and invest, what are your choices?